General Motors: Congress not buying recall explanations

By Marcy Gordon, Dee-Ann Durbin and Tom Krisher

Associated Press

Posted:
06/18/2014 02:18:44 PM PDT

Updated:
06/18/2014 02:41:14 PM PDT

WASHINGTON, DC - JUNE 18: General Motors CEO Mary Barra talks to the media after appearing before the House Energy and Commerce Committee on Capitol Hill on June 18, 2014 in Washington, DC. The committee is hearing testimony on GM's internal recall investigation and how the company is changing to prevent another safety crisis similar to its deadly delay in recalling millions of defective cars. (Photo by Mark Wilson/Getty Images)
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Mark Wilson
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WASHINGTON -- Lawmakers expressed disbelief Wednesday at General Motors' explanation for why it took 11 years to recall millions of small cars with defective ignition switches, and also confronted its chief executive with evidence that the company dragged its feet on a similar safety issue in different vehicles.

CEO Mary Barra and attorney Anton Valukas, who recently released a 315-page investigative report into the recall, endured skepticism and some lecturing at a House subcommittee hearing. One member described the actions of some employees outlined in the report as "insane."

General Motors CEO Mary Barra testifies on the GM ignition switch recall during a US House Oversight and Investigations Subcommittee hearing on Capitol Hill in Washington, DC, June 18, 2014. Barra is updating lawmakers on an internal GM report published on June 5 that absolved top management in the failure to recall millions of cars for more than a decade after the problems with the ignition switches were discovered. AFP PHOTO / Saul LOEBSAUL LOEB/AFP/Getty Images
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SAUL LOEB
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Barra made her second appearance before the committee since GM recalled 2.6 million small cars in February, as families of some of the people who died in crashes in Chevrolet Cobalts and Saturn Ions looked on. She was again pressed on whether GM's commitment to safety has changed much.

Rep. Fred Upton, R-Mich., read a 2005 email from a GM employee whose 2006 Chevrolet Impala stalled after its ignition slipped out of position while she was driving it. "I'm thinking big recall," the employee wrote -- but that recall never came until this week.

Upton asked Barra what GM would do with such an email if it was sent today, and Barra said GM would take "immediate action." She noted that GM has recently hired 40 more safety investors. But when she acknowledged that most of them were promoted from within GM, another member suggested GM get some "outside fresh blood."

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The small-car recall is the subject of an ongoing Justice Department investigation, as well as probes by the House subcommittee and a panel in the Senate. It has also triggered a deeper look by federal regulators at ignition switches across the industry. On Wednesday, the government opened an investigation into reports of defective switches on 1.2 million Chrysler vehicles.

Lawmakers at the hearing were skeptical of many of the conclusions in Valukas's report, which was paid for by GM and released June 5. The report found that a lone engineer, Ray DeGiorgio, was able to approve the use of a switch that didn't meet company specifications. Years later, he ordered a change to that switch without anyone else at GM being aware.

Panel members said that defied credibility at a company with 210,000 employees. Rep. Jan Schakowsky, D-Ill., produced e-mails showing that other employees were informed of the change.

"I do think these documents point to the fact that the problem at GM is deeper than one rogue engineer," she said.

Valukas said the employees DeGiorgio notified were from the warranty area, and the change "meant nothing to them." But he conceded his law firm did not interview everyone included in the emails.

GM blames the switches for 13 deaths, but Rep. Diana DeGette, D-Colo., said there could be up to 100 deaths associated with the problem.

Photos of some of those victims lined the back wall of the packed hearing room, and about a dozen relatives of victims attended the hearing.

GM is establishing a compensation fund for those killed or injured because of the switches, and Barra said Wednesday there will be no cap on the amount the fund can pay out. Attorney Kenneth Feinberg is still determining who will qualify for compensation, she said. GM expects to start taking claims Aug. 1.

"We want to capture every single person who suffered injury or lost a loved one," Barra said.

But Rep. Morgan Griffith, R-Va., said GM's lawyers are trying to use the company's 2009 bankruptcy to thwart lawsuits. He said GM wants to force victims from pre-bankruptcy crashes to accept its settlement offers or risk getting little compensation.

Barra didn't directly respond to Griffith's complaint.

The ignition switch in Cobalts, Saturn Ions and other cars could move out of the run position because of a heavy keychain or a bump of a knee. That causes the engine to stall, cuts off power-assisted steering and brakes and disables the air bags.

GM took years to make the connection between the switches and the air bag non-deployment. Valukas said a culture that prevented information sharing and discouraged people from taking action on problems was partly to blame.

Valukas said GM engineers also viewed the ignition switch malfunctions and engine stalling as a customer convenience issue rather than a safety problem, believing drivers could adequately control their cars without power steering and power brakes.

"That's just insane, isn't it?" DeGette asked Valukas.

"I don't want to use the word insane, but I'm deeply troubled by that," he replied.

DeGette said she has heard there is "more paranoia" within the company since Valukas's report was published because employees are worried they will lose their jobs.

Barra confirmed GM has dismissed 15 people who "didn't take action, or didn't move with urgency" to solve the ignition problems. But she said she is also encouraging employees to speak up about potential safety issues and is rewarding -- not punishing -- those who do. She said she has already gotten dozens of emails from employees reporting safety concerns.

Rep. Michael Burgess, R-Texas, said he thinks more than 15 should have been terminated, based on what he read in the Valukas report.

GM paid the maximum $35 million fine to the government in May for failing to disclose the problem sooner. Rep. Paul Tonko, D-N.Y., said that's not enough of a deterrent for a company like GM, which earned $3.8 billion last year. A bill now in the Senate would lift the cap on government fines.

Tonko said the government's regulatory agency, the National Highway Traffic Safety Administration, needs more detailed data from automakers to help track safety problems.

NHTSA admitted during April testimony that it was contacting other automakers and suppliers to find out how their ignition switches interact with air bags. That could lead to even more ignition-related recalls. On Wednesday, the agency opened an investigation into switches on 1.2 million Chrysler vehicles after getting complaints that the cars can suddenly stall and the air bags won't inflate in a crash.

2.6 million

Number of older small cars that GM recalled earlier this year to fix faulty ignition switches that it knew about for more than a decade.

3.4 million

Number of older-model large cars that GM recalled on Monday for a similar problem.

512,000

Newer Chevy Camaros recalled last week for a stalling problem. GM blames this one on the keys.

44

GM recalls so far this year.

20 million

Number of cars and trucks recalled by GM so far this year in North America.